How to Choose the Right Term Insurance Amount for your Family

Term insurance is insurance that is valid for a specific period of time and offers death benefit to the nominee in the event of the death of the insured. The premium for term insurance is low and is often the only factor that drives people to opt for term insurance.

Term insurance is a great way to secure the future of your family, in case you’re not around to take care of them in the future. We never know when and how life may end, so it’s always a good idea to insure your life so that your dependants are taken care of, at least financial, in your absence. But how do you decide how much money is sufficient for your family to take care of themselves? What is the right amount for your term insurance? Here are some deciding factors that you need to carefully look into to decide the amount of your insurance.

1. Your stage of life: The stage of life you’re at makes a huge difference to the amount of life cover you require. For example, if you’re single your only dependants are probably your parents, if they too are earning and well off, you need minimal life cover. But if you’re married with a child, your financial responsibility increases significantly. So make sure you take into account the needs of your spouse and children while choosing an insurance, if you’re at this stage of your life.

2. Your current income: Your term life insurance needs to provide your income to your family, in your absence, to ensure that they can take care of themselves. This is one of the main factors that you need to take into consideration while choosing your term insurance amount.

3. Your loans and liabilities: You need to ensure that your family is not burdened with loan repayments and other liabilities if you’re to pass away. Your term insurance amount needs to be sufficient enough to pay off all your loans and liabilities and help your family get back on their feet after that.

4. Inflation: Prices of everything in life keep changing, mainly because of inflation and deflation. We mostly see inflation and that is one factor you need to consider while choosing your term insurance amount. The things that you can buy for say a thousand rupees may cost you two or three thousand in the future. So whatever is your monthly expenditure now, is bound to go up and you need to decide your amount accordingly.